Flight From Bonds to Stocks 201 
favor of stocks, so far as this item of income is con 
cerned. But if we count the increase in the capital 
value of the securities, the advantage was reversed, 
making a net advantage for bonds of $1,012. 
This period was, as is well known, a period of rap- 
idly falling prices, so that the bondholder, so far as 
the element of change in the dollar is concerned, 
was benefited thereby. 
On the other hand, during periods of rising prices, 
such as 1901-1922, the stockholder had a very de- 
cided advantage. Test 1, for instance, showed that 
as between $10,000 invested in 1901 in stocks and 
$10,000 invested at the same time in bonds, there 
was a net advantage in favor of the stockholder, of 
principal and income together, of $10,981. 
In all these comparisons the advantages are reck- 
oned in the actual dollars received, a reckoning which 
is imperfect, first, because of the variability of the 
dollar, and second, because of the unequal distribu- 
tion in time of the returns from stocks and bonds. 
Evidently the fairest comparison is to be made 
by computing the rate of yield in the various invest- 
ments, in the sense that this phrase is used in the 
ordinary bond tables. In this way we find the real 
yield as distinct from the nominal yield. The distinc- 
tion is somewhat analogous to that between real and 
nominal wages. The rate of yield on any invest- 
ment is that rate of interest, which, if used for dis- 
counting the income and principal to be received, 
would give an aggregate discounted value at the time 
of purchase, equal to the purchase price. Thus the